NSW experiences a tale of two supers

The two NSW government-related superannuation administration firms recorded sharply divergent performances last year. Wollongong-based Pillar Administration plunged into the red after the cost of integrating a new super fund client blew out, while FuturePlus Financial Services posted a record profit.

The results for both firms have implications for their futures. FuturePlus has been put up for sale by its parent, Energy Industries Superannuation Scheme, while NSW is considering a disposal of Pillar.

A report by the NSW Auditor-General showed that Pillar, which administers the accounts of the $32 billion First State Super scheme, posted a $2.2 million loss in the 12 months to June 30, against a $3.2 million profit last time.

The collapse into the red was blamed on the cost of moving across the accounts from a new client, the Public Sector Superannuation Accumulation Plan.

The contract is worth $23 million over three years, but the bill for absorbing the PSSAP accounts was $5.3 million, more than four times the original forecast of $1.2 million.

Pillar chief executive Peter Beck said the transfer of PSSAP business was complicated because it involved replicating the history of all the accounts so that end-of-year statements could be sent out.

The project took three months longer than expected.

“We see the 2011-12 year as unique. We don’t expect to have this kind of transition again," Mr Beck said.

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FuturePlus, which has admitted potential bidders into its data room, turned a $1.6 million loss in 2010-11 into a record $5.1 million profit.

The improvement came despite a 20 per cent fall in revenues to $38 million as the firm changed its charging model from one that was based on funds under administration to a transaction-based fee.

FuturePlus chief Madeline Dermatossian said operating costs fell 30 per cent due to the streamlining of IT, administration and investment operations. “In spite of our reduced fees and without compromising our services, we’ve turned the organisation around to produce a record profit last year," she said.

“This puts FuturePlus in a healthy financial position and enables us to be competitively positioned in the market."

Ms Dermatossian said the firm hoped to participate in a tender for its largest client, Local Government Super. “We are well positioned to provide a range of services to Local."